Clear incentives

A public audit of the Emerging Technology Fund would be a step toward transparency.

Copyright 2014: Houston Chronicle |
August 8, 2014

FILE - In this Oct. 13, 2010 file photo, Texas Gov. Rick Perry reacts to questions from news reporters about the Texas Emerging Technology Fund, during a news conference after a town hall meeting with college students at Mountain View College in Dallas. (AP Photo)

'Ask Chuck' why it needs Texas taxpayers' money.

So why does a Fortune 500 company like Charles Schwab Inc. need a $6 million grant from Gov. Rick Perry's Texas Enterprise Fund to open two new offices in the state? Wouldn't the San Francisco-based company be looking to expand in Texas anyway? Do we really have to spend taxpayer money to benefit private businesses, particularly huge private businesses like Charles Schwab?

Fortunately, Texas House Speaker Joe Straus, R-San Antonio, has appointed a Select House Committee on Economic Development Incentives. The committee will make recommendations on future incentive programs at a time when a turnover in state leadership will make changes more likely.

Attorney General Greg Abbott, the Republican candidate for governor, has expressed reservations about the funds, as has his Democratic opponent, state Sen. Wendy Davis, D-Fort Worth.

The governor's office says it has given nearly $560 million to private companies from its Texas Enterprise Fund and its Emerging Technology Fund. That money, the office says, has generated 75,000 jobs.

As the Chronicle's Chris Tomlinson noted recently, those numbers can be misleading. Companies have years to meet the goals, and they frequently renegotiate the terms to lower them.

Some economic incentives are probably good investments. For example, SpaceX, which received a $2.3 million grant from the Texas Enterprise Fund, is a good bet to transform the lower Rio Grande Valley economy. Others are questionable, as a recent Associated Press analysis of Perry's Emerging Technology Fund underscores. The AP investigation found that some recipients went bankrupt, others failed to relocate to Texas and others never created the jobs.

Whatever the House committee recommends, we would hope to see more transparency. Questions about cronyism tend to melt away when exposed to the light. Legislation sponsored by Wendy Davis, requires a public audit of the funds. That's a good first step.

The funds also need to be more precise about the public benefits they hope to achieve. Will the company in question boost an economically blighted area? Will it help Texans get a promising new industry off the ground? If the answer's no, then the money stays in the pot, regardless of a company's political connections.